Definition of Cyclical Unemployment
By Dave Manuel
What is "cyclical unemployment"? What is the definition of the term "cyclical unemployment"?
Cyclical unemployment occurs when there is not enough demand for workers to employ everybody who wants a jump.
The word "cyclical" is defined as "recurring in cycles". Now apply this idea to the business cycle (recession vs growth), and you can see what "cyclical unemployment" means.
If the economy is in growth mode, then companies will be doing better and the need for workers will increase. Demand for goods and services will rise, more workers will be hired, and the number of unemployed will drop.
If the economy is in recession mode, then companies will be doing worse (on average) due to decreased demand for their goods and services. This will result in a reduced need for workers, which will result in an increase in the unemployment rate.
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